June 11 (Reuters) - Power producer Cypress Creek Energy said on Thursday it secured $3.5 billion funding for what it called one of the largest solar and battery storage developments in the United States.

The financing will support the first two phases of Arkansas Steel River Energy Center, adding 1.63 gigawatts of solar and 1.9 gigawatt-hours of battery storage to the regional grid, with long-term power sales secured through a virtual power purchase agreement, said Cypress.

U.S. electricity demand hit record levels in 2025 and is expected to accelerate as tech firms ramp up power usage at fast-growing data centers, boosting demand for solar and battery storage.

Google and Meta, among others, have announced deals this year to procure tens of thousands of megawatt-hours of battery storage, as well as solar and other clean power, for AI workloads at data centers.

Energy storage capacity grew 32% in the quarter from a year earlier, according to a report by the Solar Energy Industries Association and Benchmark Mineral Intelligence.

Cypress said the financing was underwritten by Barclays, BNP Paribas, Santander and Wells Fargo, alongside tax equity from an undisclosed major investor.

The company expects the project to be completed in three phases by 2029, ultimately delivering 2.45 GW of solar and 2.9 GWh of storage.